Greenberg, who led the insurance giant from 1968 to 2005, told CNBC Wednesday that there is no incentive for an investor to put money into AIG because it is handicapped by terms that do not allow it to profit.

“You could hardly say there’s value in AIG if the government owns 80 percent of the company. Who is going to invest in a company that’s 80 percent owned by the government?” said Greenberg. “The government terms are just unreasonably harsh.”

Last September AIG received an injection of $85 billion from the Federal Reserve Bank of New York in an effort to prevent the insurer's failure.

But, along with the hefty loan, the government attached limitations that not only hurt the company taxpayers as well, Greenberg claimed.

“You can’t pay the tax payer back by getting below fair value for the assets. That doesn’t make any sense,” said Greenberg. “AIG is a unique property, it’s in 130 countries, there’s no insurance company in the world like it. So it needs leadership, and it has to be rebuilt, and you have to renegotiate terms with the taxpayer.”